Apple instructed its Asian suppliers to hike production of the new iPhone 11 and iPhone 11 Pro model smartphones by 10% after higher than expected demand for the low-end model, according to a report in Nikkei Asian Review.
“This autumn is so far much busier than we expected,” an unnamed source told Nikkei. The earlier pre-production order for the iPhone 11s was “quite conservative” but the new increase will be about 7 million to 8 million more units, making the total early production volume to be higher than at the same time in 2018 for prior-year models.
The increase could be a validation of the approach Apple made when it lowered the cost of its low-end iPhone 11 by $50 compared to a comparable iPhone XR released last year that went for $749. The iPhone 11 was announced Sept. 10 and went on sale Sept. 20 for $699, along with the iPhone 11 Pro for $999 and the iPhone 11 Pro Max for $1,099.
Apple CEO Tim Cook has acknowledged that price is a factor in smartphone sales, although he said Apple customers are faithful and stick with the brand when they upgrade.
Paying attention to price makes sense, according to analysts, who have noticed that smartphone users hold onto phones longer which has partly led to a decline in smartphone sales of all types for the past three years. The emergence of 5G in iPhones is expected to help sales of smartphones in coming years, although Apple didn’t include 5G capability in its iPhone 11 series.
Apple sales declined almost 25% in the first half of 2019. Compared to all Android phones, it has a small share of the global market, with just 13% of the total.
The Nikkei report said Apple surged orders for the iPhone 11 and iPhone 11 Pro, but slightly lowered orders for the high-end iPhone 11 Pro Max.
Asian suppliers of the components saw increases in their stock on news of the increased order. They include Minebea Mitsumi, Japan Display and Murata Manufacturing. Other suppliers may also see a bump, including Broadcom, Qualcomm, Qorvo, TSMC, Skyworks, LG Display and Lumentum, according to Seeking Alpha. Assemblers Foxconn and Pegatron, based in Taiwan, are also expected to see a bump.
Apple is also expected to launch an iPhone SE2 in the first quarter of 2020, according to TF International Securities. It will be smaller and cheaper than the iPhone 11, but be just as powerful with the same A13 chip, according to a CNBC report.